94 STAT. 2686
PUBLIC LAW 96-499—DEC. 5, 1980
amount of any money, and the fair market value of any property, received by a nonresident alien individual or foreign corporation in exchange for all or part of its interest in a partnership, trust, or estate shall, to the extent attributable to United States real property interests, be considered as an amount received from the sale or exchange in the United States of such property. "(h) SPECIAL RULES FOR REITS.—For purposes of this section— "(1) LOOK-THROUGH OF DISTRIBUTIONS.—Any distribution by a
REIT to a nonresident alien individual or a foreign corporation shall, to the extent attributable to gain from sales or exchanges by the REIT of United States real property interests, be treated as gain recognized by such nonresident alien individual or foreign corporation from the sale or exchange of a United States real property interest. "(2) SALE OF STOCK IN DOMESTICALLY-CONTROLLED REIT NOT "United States real property interest."
TAXED.—The term 'United States real property interest' does not include any interest in a domestically-controlled REIT. "(3) DISTRIBUTIONS BY DOMESTICALLY-CONTROLLED REITS.—In
the case of a domestically-controlled REIT, rules similar to the rules of subsection (d) shall apply to the foreign ownership percentage of any gain. "(4) DEFINITIONS.—
"(A) REIT.—The term 'REIT' means a real estate investment trust. "(B) DOMESTICALLY-CONTROLLED REIT.—The term 'domestically-controlled REIT' means a REIT in which at all times during the testing period less than 50 percent in value of the stock was held directly or indirectly by foreign persons. "(C) FOREIGN OWNERSHIP PERCENTAGE.—The term 'foreign ownership percentage' means that percentage of the stock of the REIT which was held (directly or indirectly) by foreign persons at the time during the testing period during which the direct and indirect ownership of stock by foreign persons was greatest. "(D) TESTING PERIOD.—The term 'testing period' means whichever of the following periods is the shortest: "(i) the period beginning on June 19, 1980, and ending on the date of the disposition or of the distribution, as the case may be, "(ii) the 5-year period ending on the date of the disposition or of the distribution, as the case may be, or "(iii) the period during which the REIT was in existence, "(i) ELECTION BY FOREIGN CORPORATION TO BE TREATED AS DOMESTICORPORATION.— "(1) IN GENERAL.—If—-
Post, p. 2687.
"(A) a foreign corporation has a permanent establishment in the United States, and "(B) under any treaty, such permanent establishment may not be treated less favorably than domestic corporations carrying on the same activities, then such foreign corporation may make an election to be treated as a domestic corporation for purposes of this section and section 6039C. "(2) REVOCATION ONLY WITH CONSENT.—Any election under paragraph (1), once made, may be revoked only with the consent of the Secretary.
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